Council votes to sue firm over inaccurate predictions

A 2009 fire at an apartment complex spread quickly because the building did not have firewalls. (Houston Chronicle)

Houston City Council on Wednesday paved the way for city attorneys to sue an actuarial firm the city claims gave inaccurate pension estimates that spurred costly changes to firefighters’ retirement benefits in 2001.

Councilmen Larry Green and Jerry Davis voted no, for the same reason they had helped delay the item a week, over concerns about whether the firm hired to represent the city, Susman Godfrey, would subcontract with minority and women-owned firms under the city’s affirmative action contracting program.

“I understand what you’re saying about scope and specifics, but in my mind I can’t get around it,” Davis said of the minority contracting rules. “The same reasons I voted for the equal rights ordinance, that’s why I’m here today to talk about this.”

City Attorney David Feldman said the firm would not be required to do so, noting it was hired because it is qualified for the work, having represented Milwaukee County, Wis., in a similar suit that netted a $45 million settlement for the county.

Feldman said his job was to “find the best firm in what is obviously a very substantial case.”

Houston’s contribution rate to the fire pension skyrocketed soon after the changes were approved, despite an actuarial report from Towers Perrin, now Towers Watson, that predicted the payment rate would remain flat for a decade. This year, the city is contributing 33 percent of payroll to firefighters’ retirements, more than double the rate prior to the changes.

In the event of a payout in the proposed lawsuit, the money would be used to reimburse the city for the Susman Godfrey’s fees and expenses up to $970,000, and the firm would get a third of the remaining cash, with the city keeping the rest.